WILL ‘B’ SHARES BE CANCELLED?

RBS’s new Chief executive, Ross McEwan is in the middle of a discussion with the treasury regarding the cancellation of a type of shares to give the bank a normal capital structure. He is also in discussion with the Chancellor regarding the best method to redeem the DAS (Dividend Access Shares). DAS have stopped the bank to pay dividend to its ordinary shareholders.

‘B’ shares

This type of shares was introduced in 2009 at the time when government’s 45 billion pounds bail-out of RBS. 6.5 billion pounds of ‘B’ shares were subscribed by the Treasury to cover the fee. The new chief executive, who took over the bank from October 1, is in the middle of discussion to cancel these ‘B’ shares. ‘B’ shares were created to avoid the payment of fee, in cash, for the asset protection scheme.

Dividend access shares

There are discussion about advancing DAS in timing and pricing. Once a conclusion is struck, 800 million pounds to one billion pounds will be paid to the Treasury and shareholders will vote on it, at the next AGM in May.

When asked about these cancellations, Ross McEwan said that the cancellation of both the shares, he said that ‘B’ shares and DAS cancellation will increase the value of the investors.